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How are VaR based risk limits better than the traditional Quantity / Cash loss limits?

April 26, 2017based cash limits loss quantity risk traditional var

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How are VaR based risk limits better than the traditional Quantity / Cash loss limits?

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A Quantity / Cash loss limit is a post-mortem analysis, i.e. you will come to know of the breach only after it has happened. VaR based risk limits, on the other hand, are forward looking and alert the user before the limits are triggered.